Technical Support | December 2005

High Paying Jobs from

Offshore Outsourcing
An Oxymoron?
By Bi l l E l de r
CAN
offshore outsourcing actually produce high-paying jobs?
At first you might say, absolutely not. Many articles and
news shows depict that many high paying IT jobs have gone overseas.
There is no denying this. We are once again reminded of Ross Perot's
famous sucking noise of jobs leaving the U.S.
Managing offshore IT projects themselves have become more com-
plex. Companies with IT operations overseas find themselves dealing
with a multitude of cultural, language, and legal issues. Managing these
issues is starting to evolve as a profession in its own right. If you keep
on reading, you might find that you the IT professional could play an
important role in this new outsourced world.
THE TWISTS AND TURNS OF OFFSHORE
OUTSOURCING
Offshore outsourcing is increasing throughout the world. Even
European countries are seeing some of their IT jobs going overseas to
lower wage areas. The creative ways to outsource are also an interest-
ing eye opener. Fortune magazine recently exposed one innovation in
an article called "Will a Floating Tech Factory Fly?" (09-05-05 issue).
A San Diego startup company called SeaCode plans to acquire a used
cruise ship and staff it with about 600 IT staff from different countries.
The twist to this is that the ship would be docked three miles off of the
California coast. If all goes according to plan, the ship will be in busi-
ness in early 2006. This innovation addresses the growing complexity
of managing offshore IT operations in faraway places. In this case, cor-
porate managers would not have to travel very far to monitor and con-
trol IT projects.
Even this cruise ship innovation introduces other issues to manage.
For example, the staff working on the ship would not be subject to U.S.
labor laws. The ship would be under the banner of a flag from a coun-
try such as the Bahamas. Another twist in this is that the IT workers
would be legally classified as a ship's crew. Maritime labor law could
be another item for the project manager to manage. This is an example
of where you reduce costs in one area and increase your project's com-
plexity in another area.
OFFSHORE OUTSOURCING CAREER ADVICE
Many of us have come to accept the fact that offshore outsourcing
is now a factor in future career planning. Not too long ago, knowing
how to program a computer was almost a sure ticket to guaranteed
employment. How times have changed. These days we are seeing
more articles that advise IT professionals on how to navigate through
this new world.
Technical Support recently published an article called "Be on the
Right Side of Offshore Outsourcing" (August 2005 Issue) by Kathy
Bornheimer. Companies do encounter problems when they start send-
ing work overseas. The article advises to readers that being a problem
solver that addresses these complications can be a way to manage your
IT career. Companies that outsource overseas will continue to need IT
professionals to deal with security and intellectual property issues that
come with doing business overseas. Language and cultural differences
can introduce the risk of re-work or project failure. Being the IT pro-
fessional who can address these risks can also ride the offshore out-
sourcing trend. Understanding these aspects of IT can increase our
chances of continued employment.
MANAGING OUTSOURCED IT PROJECTS IS
BECOMING MORE COMPLEX
The outsourcing plot thickens because many companies are out-
sourcing their IT operations to multiple vendors. In addition, some of
these multiple vendors are in different parts of the world. This intro-
duces even more challenges for CIOs and project managers. Some
might say headaches rather than challenges. CIO magazine recently
addressed this concern in an article called "Multiple Choice Answers"
(05-01-05). According to this article, managing multiple outsourcing
2005 Technical Enterprises, Inc. Reproduction of this document without permission is prohibited.
2005 Technical Enterprises, Inc. Reproduction of this document without permission is prohibited.
vendors requires project managers to learn new skill sets. Companies
venturing into this arena have to set up a governance structure to over-
see multiple vendors. Firms doing this have to hire additional staff to
monitor business relationships with multiple vendors. If you read
enough IT journals, you will see the buzz words "relationship manage-
ment." Some of the new skills needed by these relationship managers
include monitoring service level agreements and developing vendor
performance scoring systems to evaluate vendors.
THE FRAGILE WORLD OF INTERNATIONAL
BUSINESS
Many of us have been hearing recently that the "world is getting
smaller." Many of the things we take for granted are made or serviced
from just about anywhere in the world. A disruption half way around
the world can bring a company's operations to its knees. In his book,
End of the LineThe Rise and Fall of the Global Corporation, Barry
Lynn analyzes this phenomenon. One of his most striking examples is
the case of an earthquake in Taiwan in September 1999 that disrupted
factory operations in Texas and California. These American factories
had lost their supply of semiconductor chips that were based in earth
quake torn Taiwan. As more companies outsource IT operations to
parts of the world, they too are subject to many vulnerabilities as well.
As Lynn points out, we need to better manage the complexities of
global enterprise if we want to benefit from it. Now more than ever IT
Project managers will be in search of a structured way to manage
International IT projects.
INTRODUCING THE "TRUSTED PIPE"
What if we had a way to manage offshore outsourcing and be able to
see it and manage it as a "pipe line?" The "Trusted Pipe" is a detailed
blueprint for addressing offshore outsourcing risk factors. In addition,
this methodology helps companies to choose an outsourcing vendor
and to monitor the vendor's performance.
The inventor of this innovation is Don O'Neill, a software engineer-
ing consultant and the Executive Vice President of the Center for
National Software Studies. The Trusted Pipe is a detailed grouping of
checklists and procedures to help manage the risks of offshore out-
sourcing projects. They are quite thorough. For example, Don identifies
the top ten risks of sending IT work overseas. Some of these include
protection of intellectual property, security breaches, and clashing of
corporate cultures. With each of these risks, this methodology identi-
fies ways to monitor and control these risk factors. Below is a summary
of the trusted pipe from Don O'Neill.
Don O'Neill has a patent pending on Business Management and
Procedures Involving Intelligent Middleman. This apparatus and
method provides the inside track to offshore outsourcing using the
trusted pipe architectural framework. It specifies a high speed, secure
electronic network connection between an in-country client-server and
an out-country client-server each manned by intelligent middlemen
responsible for composing and interpreting the multi-dimensional mes-
sages needed to ensure a trusted and harmonious operation.
The messages handled by intelligent middlemen span hard and soft
skills including ethical issues, cultural mediation issues, intellectual
property rights and legal opinions, security and privacy safeguards,
technology, management and engineering practices, knowledge, and
skills, domain knowledge, and technology infrastructure.
The system will manage a network of global enterprises seeking to
outsource software development and operations offshore. There are
two major types of control points. In outsourcing its software work-
load, a global enterprise interacts with intelligent middlemen in the
onshore global enterprise control point located in the U.S. In perform-
ing outsourced software development, the out source vendor interacts
with intelligent middlemen in the offshore out source vendor control
point located in the target country.
MORE ABOUT THE TRUSTED PIPE FROM
DON O'NEILL
To get more detail, we spoke with Don. If the trusted pipe was imple-
mented at firms doing offshore outsourcing, IT professionals may be
able to create a role for themselves using this methodology. We will
explore this intriguing possibility in more detail with Don.
Question and Answer
Technical Support Magazine: Some of our readers have been
affected in some way by offshore outsourcing. Your "trusted pipe"
shows that opportunities can emerge from the need to monitor off-
shore IT operations. For an IT professional who wants to transition
into Offshore Outsourcing project management, what advice would
you give them?
Don ONeill: There will be increasing opportunities for IT profession-
als to move into project management roles in support of offshore out-
sourcing. In fact it will be up to project managers to sustain the viability
of offshore outsourcing by delivering the promised benefits associated
with cost savings and quality. In managing cost and schedule be sure to
adopt earned value metrics. In managing quality be sure to insist on
software inspections.
Beyond these basics, the project manager who wishes to excel will
become skilled in requirements elicitation, determination, and manage-
ment and the change management practices needed to sustain the align-
ment of cost, schedule, function, and quality.
Other skill needs come with the territory. For example, there must be
a secure network infrastructure in place. Also the truly outstanding
project manager will learn how to manage innovation onshore and to
recapture innovation offshore.
Realistic offshore outsourcing project managers are those that pick
an offshore destination, country or region, and become expert in its
business and cultural factors. The project manager must become the
intelligent middleman bridging the gap between the global enterprise
and the outsource vendor. This person will be able to sit in the board-
room and stand on the factor floor.
TSM: Can IT professionals learn more about the "trusted pipe" by tak-
ing a course? If not, are there books and websites where they can learn
about it in greater detail?
DO: The project manager contemplating a future assignment on an off-
shore outsourcing engagement is invited to become acquainted with the
Trusted Pipe by visiting www.trustedpipe.com.
The project manager confronted with such an assignment needs to
obtain an awareness and understanding of the perspectives of global
software competitiveness including the Route to Global Software
Competitiveness, How to Think Twice Before Outsourcing Software,
and Innovation Management. The table of contents for these lecture
topics can be viewed at: http://members.aol.com/ONeillDon2/
perspect_abstract_frames.html.
Technical Support | December 2005
2005 Technical Enterprises, Inc. Reproduction of this document without permission is prohibited.
It is useful for the project manager to be prepared to conduct an
assessment of the Global Enterprise and its readiness to engage in off-
shore outsourcing and to conduct an assessment of Outsource Vendors
candidates. Please visit http://members.aol.com/oneilldon2/competi-
tor7-4.html for information on Global Enterprise Outsource Maturity
(GEOM) and the Out source Vendor Profile.
As an Independent Consultant, I am available to accept an assign-
ment to assist the project manager and the enterprise in structuring an
offshore outsourcing project and infrastructure along the lines of the
Trusted Pipe. I can be reached at ONeillDon@aol.com.
TSM: Have any companies implemented your "trusted pipe?" If so,
what were their biggest challenges in implementing it?
DO: To date I am unaware of examples where the Trusted Pipe has
been rolled out with the full complement of nodes including Global
Enterprise, Global Enterprise Control Point, Outsource Vendor Control
Point, and Outsource Vendor. While many global enterprises engage
offshore vendors, the implementation of the control points with their
intelligent middlemen has been missing. These functions have
remained embedded within the organizations of the global enterprise
and outsource vendor and usually dedicated to one project at a time.
The rapid ramp up by IBM India from 5,000 to 38,000 may inspire
the instantiation of these control points as the means to achieve per-
sonnel efficiencies, cost benefits, and management control through the
functional specialization of intelligent middlemen capable of handling
multiple engagements.
TSM: Some of our readers might be interested in implementing your
"trusted pipe." There are times when corporate management is resistant
to new ideas such as these. What advice would you give our readers to
help persuade their upper management to using the "trusted pipe?"
DO: While offshore outsourcing is becoming more widespread, it still
remains a work in progress in the industry. In approaching senior manage-
ment with a proposal for offshore outsourcing, the principal focus needs to
be one of realism that includes the identification of risks, the confrontation
of uncertainties, the need to sustain management commitment to the ongo-
ing offshore operation, and a fact-based assessment of the increasing cost
benefits that can be obtained through successive offshore projects includ-
ing the ongoing calculation of the cost return ratio for the project.
The mechanism of the Trusted Pipe anticipates the challenges asso-
ciated with offshore outsourcing and promotes the necessary atmos-
phere of realism from the outset with its Global Enterprise Outsource
Maturity assessment and Outsource Vendor Profile evaluation, its
attention to planning and requirements determination, and its focus on
intellectual property and innovation management.
The Trusted Pipe assists the stakeholders in sustaining the realistic
focus through its attention to a process rollout through training, fact-
based project management, disciplined change management, software
quality management including software inspections, continuous risk
management, recapture of intellectual property using team innovation
management, and genuine culture mediation.
Since offshore outsourcing is still a work in progress and software
projects inherently require a process of experimentation, the Trusted
Pipe and its realistic approach within a process infrastructure of defined
disciplines tolerates a wider range of uncertainty without drifting into
chaos. However, senior management must pay necessary due diligence
to the disciplines of software project management, software product
engineering, and software process management.
The acid test for senior management comes on the first engagement
when the cost benefits inherent in the wage structure differential are
subsumed by unanticipated costs yielding a marginal cost return ratio.
The truly senior manager will recognize that the full cost benefits may
not reveal themselves perhaps until the third project. The Trusted Pipe
provides the framework to see these benefits materialize realistically
and without the over promising that leads to disappointment.
TSM: The IT professional is not as secure as it used to be. Offshore
Outsourcing has caused some to leave the profession. Are there new
and significant opportunities for IT professionals to participate in proj-
ect offshore management?
DO: Offshore outsourcing is likely to emerge as an important industry
segment. India receives about $15B in software outsourcing today and
expects to see this increase to $50B by 2008. IT professionals will ben-
efit by understanding the infrastructure and job functions needed to
perform offshore outsourcing in the best possible way. The Trusted
Pipe provides the architecture for this infrastructure. The challenge for
the individual IT professional is to guide ones career progression in the
direction of the most valuable functions. Increasingly these will be the
ones associated with innovation.
In offshore outsourcing the highest value is assigned the legal and
business functions of the Global Enterprise; the lowest value is
assigned the engineering function of the Outsource Vendor. The Global
Enterprise business need is met by the engineering function of the
Outsource Vendor. The process, management, and culture functions
performed by the Global Enterprise and Outsource Vendor Control
Points are necessary to eliminate friction. In the international outsourc-
ing environment, this is what the outsourcing integrator does: selects
and organizes the parts and eliminates friction thereby improving the
predictability of the outcome.
The intermediate functions of requirements determination, product
architecture and specification, project management, process management,
and quality assurance are most subject to rearrangement where the crite-
ria for rearrangement are tied to the prospect for innovative contribution.
For example, in the innovation-driven arrangement requirements determi-
nation is tightly coupled with consumer innovation, and product architec-
ture and specification are tightly coupled with producer innovation, so
these are accorded high value. On the other hand, certain process, man-
agement, assurance, and culture functions necessary to eliminate friction
and improve the predictability of the outcome are only loosely coupled
with innovation-driven activities and are thereby accorded less value.
It is here among the job descriptions of these middlemen that stan-
dards-based commoditization can be further advanced to assist pre-
dictability and increase software industry efficiency, where additional
opportunities for disintermediation may yield further productivity
gains, and where the residue of intelligent middlemen with their essen-
tial software job descriptions and functional activities can be elevated
within the value hierarchy.
SOME PARTING THOUGHTS
There is no denying that offshore outsourcing can be quite disruptive
at times. As with any disruption, opportunities can sometimes emerge.
For example, the ATMS have eliminated some teller jobs but at the
same time have created opportunities for ATM repair technicians.
Some thought that the Internet would put the post office out of business
because of emails and online bill payments. Now the post office is
busier than ever thanks in part to Amazon.com and e-bay.
Offshore outsourcing has no doubt eliminated some jobs such as pro-
grammers and testers. Just perhaps this disruptive business model
Technical Support | December 2005
2005 Technical Enterprises, Inc. Reproduction of this document without permission is prohibited. Technical Support | December 2005
might actually create some very lucrative opportunities and jobs here
at home. Hopefully it will.
SOURCES
Fortune. "Will a Floating Tech Factory Fly?" by Reed Tucker.
September 5, 2005 p.28
Technical Support. "Be on the Right Side of Offshore Outsourcing"
by Kathy Bornheimer. August 2005 Issue
CIO. "Multiple Choice Answers" by Susannah Patton. May 1, 2005
p. 66 - 73.
End of the Line - The Rise and Coming Fall of the Global
Corporation by Barry C. Lynn. Published 2005.
WEB SITES
Sea Code's Corporate Web Page
www.sea-code.com
Trusted Pipe's Web Page
www.trustedpipe.com
NaSPA member Bill Elder is a systems analyst with SETA Corporation sup-
porting an IT contract with the Department of Homeland Security. Bill is also
certified as a software tester through the Quality Assurance Institute. He
works primarily with mainframe and SAP-based systems.